MANAMA, 17 January 2004 — Investment banks in Bahrain, the Gulf’s banking hub, are slowly putting money into projects in the Arab world, but political and other obstacles are still holding many back, Bahraini bankers say.
Bureaucracy, the small scale of regional markets and a volatile political and security climate mean potential investments of $1.5 trillion are being put off, they say.
Stagnant economies in the Middle East and North Africa are in need of investment but those Bahraini banks that do invest small parts of their assets put it mainly into energy-related projects in the oil- and gas-rich Gulf region. The tiny island state of Bahrain is the banking powerhouse of the wealthy Gulf states.
Arab Banking Corp (ABC), one of the biggest Arab banks, said last month the recent sale of stakes in two international units freed up around $1 billion of capital resources that could be used in Libya, Iraq and other countries in the Middle East.
“The capital generated from these two investments will give our corporation big opportunities to boost its presence in the Arab world, which has a number of promising markets,” President and Chief Executive Ghazi Abdul-Jawad told Reuters.
But Abdul-Jawad expressed disappointment with Gulf Arab states which he said were hindering international investors from establishing banks or securities firms, making it difficult for ABC to expand its operations in the region. “Some Gulf countries prevent even nationals from the rest of the Gulf from investing in their stock markets,” he said.
Analyst Jassim Hussein said the United States is preferred as a place for investment because it is a huge, transparent market that allows easy movement of cash. “Billions are exchanged every day with transparency. It is not only easy to buy big projects in the United States, but also to sell them as easily,” Hussein said.